The long-term impact of (un)conditional cash transfers on labour market outcomes in Ecuador

Abstract: Despite the popularity of conditional cash transfers in low- and middle-income countries, evidence on their long-term effects remains scarce. This study assesses the impact of Ecuador's Human Development Grant on the formal sector labour market outcomes of children in eligible households. This grant, one of the first of its kind, is characterized by weak enforcement of its eligibility criteria. Using a regression discontinuity design, we find that the programme had no overall impact on formal employment rates and labour income earned in the formal sector around 15 years after exposure, and thus not affecting the intergenerational transmission of poverty. We only document a positive effect on the non-mestizo population (mainly consisting of indigenous and Afro-Ecuadorians).